The Denver Post’s Aldo Svaldi reports that the U.S. Court of Appeals for the 10th Circuit cleared the way for Colorado to enforce its interest rate limits on certain consumer loans made through out-of-state, state-chartered banks. In a 2 to 1 ruling, the panel overturned a federal district court’s injunction and said Colorado can apply its cap to loans effectively made to Coloradans, including the rent-a-bank partnerships that were skirting state rules.
The decision revives Colorado’s strategy to shut down triple-digit APRs that reemerged online after voters passed Proposition 111 in 2018 capping payday loans at 36 percent. Lawmakers in 2023 used a federal opt-out in the Depository Institutions Deregulation and Monetary Control Act to stop exported high rates. Lenders sued, won a pause in June, then lost on appeal when judges read “loans made in such states” to include where the borrower lives.
Consumer advocates are celebrating and say other states are watching. Industry groups warn access to credit will shrink and vow to keep fighting. The Post notes some products carried APRs near 200 percent, while nonbank partners reported loss rates as high as 55 percent. The battle over where a loan is “made” just set a precedent in Colorado.
The Bullet Point Brief
- Colorado gets the green light to enforce its 36 percent cap on loans funneled through out-of-state banks. The rent-a-bank carnival closes at midnight.
- After Prop 111 smacked payday loans, lenders pivoted to “alternative” products with triple-digit rates. Different wrapper, same wallet trap.
- A district judge said a loan is made where the lender sits. The 10th Circuit said the borrower’s ZIP code matters. Translation: our house, our rules.
- Industry says consumers will lose options. Advocates say 100 percent APR is not an option, it is a bear trap.
- Lender groups plan more legal swings. Meanwhile, states eye Colorado’s playbook like coaches stealing signs.
My Bottom Line
I used to live by the hard line. You sign it, you own it. Personal responsibility matters. But there is also a biblical word that keeps ringing in my ears: usury. It is not just an old churchy term. It is a warning about what happens when people in power turn neighbors into revenue streams. When rates jump into the triple digits, the average American stops being a citizen and starts being a dairy cow. Milk until empty, then move to the next stall.
Scripture draws a bright line. Deuteronomy 23 says do not charge your brother interest. Leviticus 25 tells God’s people to help the poor among them without interest so the person can live. Nehemiah 5 is a full on rebuke of nobles who exploited hardship. Psalm 15 praises the one who does not take interest against the vulnerable. Proverbs 28 says those who pile up wealth through interest will see it handed to the one who pities the poor. Ezekiel 18 calls predatory interest a sin. The lesson is not that all interest is evil. The lesson is that exploiting the desperate is. In plain English, lending should lift people, not grind them into dust.
So yes, cap it. A 36 percent speed limit on consumer loans is not socialism. It is a guardrail. If your business model needs 120 percent APR to survive, the problem is not the guardrail. The problem is the car. Colorado used a lawful tool to stop a workaround that treated our residents like targets. Good. Now let’s pair that with more honest small-dollar products from banks and credit unions, more financial transparency, and more neighbors helping neighbors. People are created in the image of God. Treat them like image bearers, not ATMs with legs.
Source: The Denver Post
